ISH lender Banco Popular is planning to issue shares in a bid to avoid taking public funding, the bank announced yesterday.
Stress tests published last week revealed a €3.2bn (£2.6bn) shortfall in the bank’s capital levels, meaning it will have to tap the government’s bailout fund – backed by the Eurozone – if it does not raise sufficient funds by the end of the year.
Yesterday it announced plans to raise €2.5bn in stock issuance.
Shares plunged 10 per cent on the news, before recovering to end the day down 4.8 per cent.
UBS and Deutsche Bank are thought to be frontrunners to manage the offering.
Star banker Andrea Orcel, who joined UBS from Bank of America Merrill Lynch in March this year, flew to Madrid yesterday to pitch to Banco Popular for a lead position on the deal on behalf of his new employees, banking sources told City A.M.
UBS declined to comment.
The Swiss banking giant last week took the lead role on the spin-off of Santander’s Mexican business, with Orcel spearheading the deal.